Catch-up with SEP & 401k

[jevd]

IRC 414(v) and the final regs at http://www.ustreas.gov/press/releases/repo...v)finalregs.doc

I Still maintain that the catch-up limit is a deferral and the deferral limits are individual limits and therefore the SIMPLE catch up limit is $ 2,500.00.

Please cite the specific section of this regulation that implies multiple plans of different employers allow for a SIMPLE Catch up contribution of more than $2,500.00

[Belgarath]

jevd - please take a look at 402(g)(1)©. For purposes of the 402(g) limit, the limit for catch-up contributions specifically refers ONLY to 414(v)(2)(B)(i). It does not reference (B)(ii). If it referred to (B)(ii) I would agree with you, but since the limit is (currently) specifically $5,000, then that's your answer. 414(v) and the accompanying regulations are dealing with individual plan limits, and the individual SIMPLE IRA must indeed limit any catch-up to the 2,500. But, if they are unrelated employers, then the total limit reverts to the limit specified in 402(g)(1)© - and hence to the 5,000 in 414(v)(2)(B)(i).

That's how I read it, anyway.

[jevd]

jevd - please take a look at 402(g)(1)©. For purposes of the 402(g) limit, the limit for catch-up contributions specifically refers ONLY to 414(v)(2)(B)(i). It does not reference (B)(ii). If it referred to (B)(ii) I would agree with you, but since the limit is (currently) specifically $5,000, then that's your answer. 414(v) and the accompanying regulations are dealing with individual plan limits, and the individual SIMPLE IRA must indeed limit any catch-up to the 2,500. But, if they are unrelated employers, then the total limit reverts to the limit specified in 402(g)(1)© - and hence to the 5,000 in 414(v)(2)(B)(i).

That's how I read it, anyway.

414(v)(2)(B)(i) states:

414(v)(2)(B)(i) In the case of an applicable employer plan other than a plan described in section 401(k)(11) or 408(p) the applicable dollar amount shall be determined in accordance with the following table:

Doesn't exception phrase apply?

If it doesn't then I think its a mistake that hasn't been caught and the possibility of the situation existing is rare although apparently has occurred inthis case.

That's my interpertation

[Belgarath]

Yeah, I saw that too - in fact, my initial reading was exactly the same as yours. I guess we'll just agree to disagree on this - after re-reading it, I still remain of the opinion that 402(g) language would have referred to (ii) if there was intent to limit the overall limit to the 2,500. 414 has to throw in (ii) because it is dealing with individual plan limits. Your interpretation is certainly safe, and may well be the correct reading.

Of course, wantstolearn probably has the only actual such case in the entire USA, so this is unlikely to generate a lot of controversy at any practical level.

[jevd]

Thanks Belgarath for your informative discussion. I appreciate your professionalism.

I agree this is probably the only case that will ever come up.

regards.

[Belgarath]

If the ground starts shaking, we'll know for sure that you are right!

Thanks for the comments. Ditto here. That's why these boards are so great - they force me to look at things through another pair of eyes, which are frequently sharper than mine.